What Are The Steps To Sell a House you Inherited In North Carolina?
Are you planning to sell the house you inherited in North Carolina and yet don't know how to go about it?
During a loss and heartbreaking times, it could be added stress to have a deal with selling a property especially when you don't know how and where to start.
Hence, here are steps to guide you with your preparations.
1. Evaluate the status of an inherited real estate property.
Identify the legal heirs, the assigned executor or administrator who will handle or pay off taxes and bills in order to determine the actual value of the property prior to selling. Most inherited properties are passed down either through a probate process or non-probate inheritances.
Probate Process in North Carolina
Probate is a court-supervised process that transfers the assets of someone who has died to someone else. The court will assign an executor (if there is one named in a will, most often one of the heirs) or appoint an administrator (if there is no legal will) to help with the probate process. This typically includes collecting assets, paying off any debts and liabilities and distributing the remaining assets to any beneficiaries. Probate will also oversee the potential sale of any inherited properties.
When there is no will on record or when assets and property have not been assigned in the will on file, the probate process used to distribute property and assets is called intestate succession. Without a will, some or all of the assets will be distributed to the remaining relatives based on relationship. The order in which debts must be paid and the distribution to heirs is determined by the North Carolina intestate succession laws.
How much does a Probate process cost?
The cost of the process depends on factors such as the property's value, the complexity of the court process, and other miscellaneous costs of administration.
- Probate Attorney Fee: This is optional. The executor may handle the process on his own or may utilize the services of a probate lawyer to simplify the inheritance process. The fees will depend on the the size of the estate, and the nature of the assets and claims against the estate.
- Court costs: Main expenses includes the filing fee, probate fee, the appointment of the executor and executor fee, and the cost of all certificates issued by the court.
- Property Assessment Fee: If you wish to sell the inherited property while on probate, you or your representative are obligated to evaluate the property to list it on the real estate market and then sell the property with the distribution of funds among the heirs.
What are the steps in probate or intestate process? Here's an overview.
- The inheritor will file a petition at the probate court with the death certificate of the owner, along with the will (if there is one) and other supporting documents; If there is no legal will made by the deceased owner, the inheritor requests the court to appoint an administrator to supervise the property. Note that when filing for a probate process, you need to consider the expenses or probate fees.
- Hearing on probate petition.
- Court determines validity and approves the will.
- Court will assign and approves executor; or for intestate cases, the court will assign an administrator.
- Executor or Administrator identifies the value of the estate or estate inventory, gives public notice to creditors and pays debt, bills and taxes and other liability claims, and also supervise potential sale of the property.
- Petition for Final Distribution.
- Distribution of Assets. Executor or administrator distributes assets to approved legal heirs and/or to the new legal owner of the property.
Non-Probate North Carolina Inheritances:
Probate isn't always required after a death; it depends on what the deceased person owned and the value of the property. Probate court proceedings are required only if the deceased person owned assets in his or her name alone. Other assets can usually be transferred to their new owners without probate.
Examples of common assets that do not need to go through probate include:
- Assets the deceased person owned in joint tenancy, which pass automatically to the surviving owner like real estate property that the deceased person owned with his or her spouse in "tenancy by the entirety."
- Assets with Transfer Death deed or Beneficiary Deed: This type of payable-on-death deed is a simpler way to inherit a property. You will immediately take over ownership of the property you inherited and avoid the hassle of probate. You can also sell the inherited home as soon as you are ready.
- Assets held in a Living Trust: Another simple way to inherit a property is through a living trust. This is a legal document that lists your parents as the trustees of their home and assets, and names you as the beneficiary. The trustees may outline in the trust which person will make the final decisions surrounding the sale of the home if there are many beneficiaries.
- Summary Probate: North Carolina offers a simplified probate procedure, called summary probate, if the only surviving beneficiary (person named in the will to inherit) or heir (person who has the legal right to inherit under state law if there's no will) is the surviving spouse of the decedent. The spouse files a petition with the court, along with the will and any supporting evidence. The court clerk enters an order that no further probate proceeding is necessary. The surviving spouse presents a certified copy of this order and collects the property.
2. Identify the Executor or Administrator who will handle the Sale
Can you sell a property while on probate? Yes. Just determine who holds the legal responsibility to handle the sale transaction, which is either the executor or the assigned administrator.
If you are appointed executor, the court will issue a document called "Letters Testamentary" and if you are appointed as administrator, you'll receive "Letter of Administration" which gives you authority and responsibility to handle real estate transactions including sale in the market.
If the property is in a trust, the trustee holds this same power.
3. Pay off Taxes, Debt and Bills
One of the first jobs of the executor or administrator is to publish a notice of the probate proceeding to the public or deliver a notice to creditors about how, when, and where they can file claims against the estate.
- Mortgage Debt: The executor or administrator may execute the transfer of the mortgage ownership with legal formalities or sell the assets to pay off the outstanding dues and other owner's debt, and/or ask the mortgage lender to foreclose the property to recover the dues.
- Funeral and burial expenses.
- Capital Gains Taxes on Inherited Home: It is only paid while selling the property and not while inheriting it. These taxes are levied on a stepped-up basis by the IRS (Internal Revenue Service) authority.
- Federal Estate Tax (ONLY applies to estates exceeding $11.4 million): It is due nine months after death. The tax basis is the gross value of an entire estate including half of the value of property owned with someone else. The marital deduction allows property and assets left to the spouse to be exempt from the federal estate tax.
- Individual Federal & State Income Tax: This is due by Tax Day the year following death which we normally do as individuals each year. In accordance to the IRS, "All income up to the date of death must be reported and all credits and deductions to which the decedent is entitled may be claimed."
- Federal Estate Income Tax: This is due by April 15 the year following the death. If the decedent has an estate that generates an annual gross income more than $600, then they are separate taxable entities. You need to order a tax ID number for the estate to file it as a separate taxable entity using IRS Form 1041 in filing estate income tax returns.
- Federal Trust Income: It is due by April 15 the year following death. The trusts must file Form 1041 each year it has $600 in income or has a beneficiary who is a non-resident alien.
- No Estate Tax in North Carolina
4. Condition the Inherited house for Market Value
Ideally, it's recommended to work on the repairs before selling the house. If you want to sell the inherited property against some quick cash in order to pay off debts or any mortgage on that property. Then, in that case, it is suggestible to bare the minimum amount on the condition of the property in order to get the most comparative market price.
5. Market the Property
Like any other real estate property, there are multiple avenues the executor or administrator can take to sell it. While you may sell the home on your own, you can also lessen your burden of the tasks done when selling by hiring a real estate agent with experience and knowledge.
To search Homes for Sale in Wilmington, NC, click here.
Wondering what your home could sell for? Click here for a Free Instant Home Value Report.
We Can Help!
Are you looking for the best real estate agency in Wilmington, NC? When choosing a real estate agent, be sure to go with someone who has the expert knowledge of listing and selling property. The Regina Drury Real Estate Group has that and more. We are a Full-Time real estate company in Wilmington, NC; our crew can provide you with all of our expert knowledge and focus on maintaining a high degree of customer service that will leave a lasting impression. Contact us today to talk more about your real estate needs.
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